Kandi Plans Electric Car Network in Beijing, Shanghai

Feb. 24 (Bloomberg) -- Kandi Technologies Group Inc., a
Chinese electric carmaker that rents out vehicles to the public,
said the service is profitable and plans to expand it to cities
including Beijing and Shanghai.

“I have been meeting local officials from other cities who
have been visiting our company almost daily in the past few
months,” Kandi Chairman Hu Xiaoming said in a Feb. 21 interview
at the company’s office in Hangzhou, Zhejiang province. “They
are very interested in our model and keen on promoting use of
electric vehicles in their cities.”

“Kandi’s business model can bypass obstacles in the
promotion of electric cars such as inconvenience of charging,”
said Harry Chen, a Shenzhen-based analyst with Guotai Junan
Securities Co. “By expanding into more cities, it will help
stimulate the overall electrical vehicle business in China.”

The automaker’s shares have outperformed the Nasdaq
Composite Index this year after tripling in 2013, as China
stepped up efforts to combat worsening air pollution and
encouraged the adoption of electric vehicles. The world’s
second-largest economy is lagging behind its target to have 5
million alternative energy-powered vehicles by 2020 because of a
lack of charging stations and high costs.

Local Partners

Kandi is selecting local partners in Shanghai, Beijing and
Chengdu, the capital of southwestern Sichuan province, Hu said,
without specifying a timeframe. In Hangzhou, the company is
working with the local government to add rental stations to
public parking lots, hotels, department stores and high-speed
train stations, he said.

It may take three to five years for the rental network to
cover the entire city, Hu said.

Lu Pin, a sales representative, rents the Kandi EV at least
three times a week to make visits or deliveries to customers.

“My boss makes it a rule for all staff who need to go out
for business to use the rental EV instead of a taxi,” said Lu,
24, who paid 21 yuan for a 90-minute drive that would have cost
three times as much in taxi fare. “We save a lot of money and
feel we’re helping to clean up the air.”

Subsidy Cuts

Electric vehicles received a boost this month after China’s
central government said it will scale back on previously
announced subsidy cuts and extend financial support beyond 2015.

China is home to some of the world’s most polluted cities,
where smog levels can surpass World Health Organization safety
thresholds by almost 40 times. Outdoor air pollution was found
to cause lung cancer and linked to an increased risk of bladder
cancer, a WHO agency said, rating it as a carcinogen for the
first time.

To combat air pollution, China’s State Council, or cabinet,
released a national plan in September that called for a 15
percent to 25 percent reduction in particulate matter by 2017 in
the three key manufacturing regions anchored by Beijing,
Shanghai and Guangzhou.

China will support the promotion of new-energy vehicles in
a second batch of cities and regions, including the northeastern
provinces of Jilin, Liaoning and Heilongjiang, the finance
ministry said in a separate statement dated Jan. 27.

Despite the official endorsement, battery-powered autos
remain a niche product in China’s auto industry, with total
sales of 14,604 units last year, or less than 1 percent of total
industry sales, according to the China Association of Automobile
Manufacturers.